I believe many people have heard of the phrase "funds should be invested for a long time", but some people don't quite understand why funds should be held for a long time. If people have doubts about this, it means that their understanding of funds is actually not enough. Let me explain why funds should be held for a long time.

why should the fund be held for a long time?

1. Short-term operating fund costs are too high

Fund subscription and redemption require handling fees, which are limited to Class A funds. If the fund operates for a short period of time, it needs to collect huge handling fees. Generally, funds have regulations on the collection of fees. If the fund is held for less than 7 days, it needs to collect 1.5% redemption fees. This redemption fee is very large. Under normal circumstances, the income that the fund can create for us in 7 days is very limited. There are at most five trading days in seven days. Even in a big bull market, we won't get high returns from the fund. If the redemption fee of 1.5% is deducted, it will be a huge blow to our investment. In addition to the impact of 7 days on the fund redemption fee, the longer the fund is held, the lower the redemption rate, so holding the fund for a long time has a better impact on our income.

2. The overall price of stocks is on the rise.

Equity funds may be the ones that people buy the most, and some assets of equity funds are invested in the stock market. Relevant statistics prove that stock prices generally have a long-term historical trend of continuous upward growth, which is also an important basis for the long-term investment of funds to make profits. From the perspective of economics, the price fluctuation of the securities market shows obvious bias characteristics, and the stock price generally has a long-term historical trend of continuous upward growth, rather than a short-term market performance, which is an important theoretical basis for the long-term investment of funds to make profits. Buffett, the investment guru, is the best practitioner of long-term investment. The same is true for investment funds, which insist on investing and always strive for positive expected annualized expected returns, because the power of compound interest will create amazing expected annualized expected returns.

Of course, not all funds are suitable for long-term holding. The basic people need to screen out suitable funds for long-term investment. The screening of funds can be carried out according to the historical performance of funds and the situation of fund managers. In addition, long-term holding of funds does not mean that they will not be sold at all. When the income of funds reaches your expectations, the funds can be sold. In addition, when the funds change adversely to the income of funds, the basic people also need to change their strategies and sell them in time.